A Guide to Help Prevent Foreclosure

When foreclosure is a possibility, homeowners need help. Red Blue Realty’s professionals can offer homeowners a guide to help prevent foreclosure.

The first step is to take action, rather than ignoring the possibility of foreclosure. Often homeowners feel hopeless and don’t recognize the options available to them. Contacting a mortgage lender may result in positive outcomes. Lenders want to avoid foreclosure too: it’s
time consuming and costly for lenders as well as homeowners.

If a homeowner is ready to leave the property, he or she should turn to real estate professionals to estimate market value. Red Blue Realty can provide up to date information about home profitability. With the market recovering, a home may no longer be underwater, and could yield a sale that puts profit in your pocket.

If a home is still underwater, with a loan amount more than the value of the home, Red Blue Realty can help with another option to help prevent foreclosure – a short sale. A short sale means the home is sold for less than the mortgage balance. The lender must agree to accept the proceeds of this sale as a full mortgage payment. If the lender won’t accept this plan, a homeowner can still negotiate a “deed-in-lieu of foreclosure.” In other words, in this type of arrangement, the homeowner turns the property over to the lender, receiving a loan cancellation in exchange.

Real estate professionals like Red Blue Realty can help you ascertain that the lender is forgiving the entire amount of mortgage debt. Homeowners shouldn’t sign any documents without being certain that the entire debt is forgiven. You should also consider the tax consequences of this type of arrangement. Cancelled debt may be taxed as income.

If you want to stay in your home and still help prevent foreclosure, talking to your lender and discussing options for making good on your mortgage payments is vitally important. But before you do, analyze the amount you can pay towards your mortgage. Review at least three months of bank and credit card statements, determine how to cut back on expenses, or create new income to raise money for the mortgage. Bankruptcy filing is another option that may eliminate other debts and prevent the loss of a home.

The next step is negotiating a payment plan. Lenders may let you get caught up on past payments by spreading payments out over a number of months or they may even provide a temporary suspension in payments.

Lenders may also be able to refer you to interest-free loans from HUD, or offer permanent mortgage modification amounts, based on your income. Getting help to prevent foreclosure isn’t impossible, and Red Blue Realty can guide you through some of the options available. Give us a call or drop us a line if you have questions, and by all means avoid the scam artists who promise help but charge exorbitant fees and offer no help at all.

With options available, the first step is to address your situation before foreclosure turns into the only option. Let Red Blue Realty help you with the choices that help prevent foreclosure.